HKMC hits back at critics who say it’s not helping first-time Hong Kong homebuyers

The Hong Kong Mortgage Corporation fired back at critics who say it is not doing enough to help first-time buyers, presenting data on Wednesday that showed its mortgage business volume rose sharply in 2017, with a concentration of support to buyers of homes worth HK$6 million (US$765,150) or less.

The government-owned agency said mortgage business volume for 2017 rose 30 per cent on the year to HK$32.3 billion, and expanded 20 per cent in the first two months of 2018 when compared to the year-earlier period.

It has faced criticism that the criteria for homebuyers to qualify for its mortgage support are too restrictive, limited to flats worth below HK$6 million, of which there is a diminishing supply in Hong Kong’s red hot market. But Raymond Li, chief executive of HKMC, claims the latest figures prove otherwise.

“The fact the HKMC has seen increasing business volume in the mortgage insurance schemes shows the current restrictions have not stopped people from using the scheme to buy their own homes,” said Raymond Li, chief executive of HKMC.

The HKMC provides mortgage insurance schemes with the intention of helping those who struggle to come up with the 30 per cent down payment on a home. The group’s Mortgage Insurance Programme allows potential homebuyers to get an 80 per cent loan-to-value mortgage for flats worth up to HK$6 million and a loan-to-value mortgage of 90 per cent on homes worth HK$4 million or less.

The HKMC has been battling critics who say these price thresholds are set too low to help first-time buyers get on the housing ladder. As Hong Kong’s property market continues to break one record after another, the pool of homes available for less than HK$4 million or HK$6 million gets smaller and smaller.

Some lawmakers have called for a relaxation of the value thresholds as a way to help first-time buyers.

But Li said the bulk of applicants are from those seeking to tap the 80 per cent loan-to-value ratio, while about 10 per cent of applicants were applying for 90 per cent mortgage loans.

About 40 per cent of applicants seeking a 90 per cent mortgage were looking at flats in Tuen Mun, Yuen Long and Cheung Sha Wan, Li said.

“This shows there are still flats valued below HK$4 million and people could still use the mortgage insurance scheme to buy their own home,” he said.

Li said the HKMC reviews the property markets from time to time, but did not think it was currently appropriate to relax the scheme, citing growing risks.

“The interest rate in Hong Kong is on a rising trend while home supply is also going up. Under such circumstances, the risks of the property market are high,” Li said.

Financial Secretary Paul Chan Mo-po in January said the government is taking a cautious approach over plans to review its mortgage policy for first-time buyers, amid concerns of overheating. 

Sun Hung Kai Properties, Hong Kong's largest developer by market value, in January also called on the mortgage corporation to ease its lending scheme for mass-market flats.

Last year, the average price of a new flat rose 16.9 per cent to HK$12.57 million from 2016, according to Ricacorp Properties. The price for used flats grew more slowly, at about 13 per cent for the year.

Meanwhile, Li said the HKMC plans to join hands with banks to offer infrastructure financing for projects around the world. He added that retail bond sales in Hong Kong could be used to raise the necessary financing.